Franchises; prohibit franchisor from requiring franchisee to operate on a religious day, exceptions provided
Summary
SB138 creates a new franchise-law protection for franchisees who assert a sincerely held religious belief that conflicts with operating on a religious day. In general, a franchisor would be barred from enforcing a religious-day operation requirement, forcing that requirement into an amendment, or refusing to renew a franchise because the franchisee will not comply. The bill defines key terms such as franchisor, franchisee, franchise agreement, original franchise agreement, and religious day operation requirement, and it excludes certain regulated industries, including motor vehicle and specified alcohol-related franchise arrangements.
The bill includes exceptions where the religious-day operation requirement was already clearly included in the original franchise agreement, or where the franchisee later agrees to it through renewal, amendment, or expansion of the franchise locations. It also authorizes a private cause of action and allows courts to award actual damages, attorney fees, costs, injunctive relief, and civil penalties that increase for repeat violations. The act is set to take effect on June 1, 2026.
Impact
SB138 would add a new statutory limitation on franchisors in Alabama by restricting contract enforcement when a franchisee’s sincerely held religious beliefs conflict with operating on a religious day. It would create enforceable rights for franchisees, expose franchisors to damages and civil penalties, and likely affect franchise contract drafting, renewal practices, and dispute resolution. The bill expressly carves out certain existing franchise-regulated sectors, so its reach would not extend to those industries.
Sentiment
The available voting history suggests broad support and little opposition. The bill passed both chambers overwhelmingly, including unanimous or near-unanimous votes on several readings and concurrence motions, with only one recorded no vote in an earlier House-of-origin action. No committee transcript is available, so the record does not show detailed debate, but the final votes indicate the measure was generally well received.
Contention
The main policy tension in SB138 is between protecting religious exercise for franchisees and preserving franchisors’ ability to set uniform operating requirements and protect brand consistency. Franchisors may view the bill as limiting contractual freedom and operational control, especially where weekend or holiday business hours are important. Franchisees and supporters of the bill would likely emphasize conscience protections and the ability to avoid penalties or nonrenewal for observing religious days. The exceptions for original agreements, later consent, and expansion-related agreements appear designed to address concerns about retroactively altering negotiated franchise terms.
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